( ESNUG 438 Item 19 ) ------------------------------------------- [01/18/05]
Subject: 8 Wall Street People on the Cadence-Verisity Merger
> Cadence announced it's buying Verisity for $285 million in cash.
>
> As a Wall St. person, is good news or bad news? Why?
Should be much better in execution, though strategy is confusing.
I think you should do a fresh EDA user poll on the viability and
usefulness of "e" vs. Vera vs. System Verilog.
- [ A Wall Street Person ]
For VRST investors, it's good news. Your stock that was worth $7.40
on Wednesday is now worth $12. So that's good news, unless you
thought that VRST would actually worth more than that.
For Cadence it's good news from a product portfolio perspective. It
brings something to compete with the VCS/Vera bundle to the party,
though it wipes $230 million off their cash balance (which was about
$410 million at the end of September). It also introduces an
additional acceleration/emulation technology to complement Palladium
at the high end.
- [ A Wall Street Person ]
Good news. M&A with a hefty premium is always welcome news.
- [ A Wall Street Person ]
I like the deal and think it's logical for both VRST and Cadence.
It solidifies the position of Cadence in emulation, and gives them
a great set of logic verification tools as well as another weapon to
needle SNPS with. For VRST, it's a good price for the shareholders
and should lead to somewhat better distribution for their core
verification tools.
- [ A Wall Street Person ]
I believe the Cadence-Verisity merger is good for the EDA industry
overall. Shows investors that M&A can occur - and at a 60% uplift
from current market value. This will hopefully will encourage
investors to ramp up funding, allowing the industry to further develop
leading edge tools, and ensuring Moore's law is followed.
- [ A Wall Street Person ]
I think this merger is generally good news. Good for customers.
Certainly important as it's Fister's first big move. Intel is a big
VRST customer -- no doubt Fister probably got some good feedback on
the technology.
The premium was huge but absolute price not too crazy as some have
been in the past. Certainly good for VRST. I believe for CDN, too.
Especially given the nature of VRST language based solution having
the technology pushed out through CDN channel ought to give "e" or
whatever it morphs into a better chance even if eventually System
Verilog takes hold.
Not good for SNPS at the edge, but they've got bigger issues. Think
LAVA/ VRST would have been more interesting, but LAVA not in a position
to buy much. Premium suggest that someone else involved. MENT had an
interest, but I suspect that this was too rich for them. The merger
agreement will tell.
Same dynamic as ever. Consolidation will continue. For example, does
anyone other than perhaps Ken McElvain think SYNP ought to remain a
standalone company?
- [ A Wall Street Person ]
Great for the Verisity shareholders because they received a whopping
(65%?) premium on their public shares in a company that wasn't on any
path to something really big or profitable. Unfortunately they
received cash only and no Cadence stock. Therefore there is zero
future upside for them beyond the initial cash received.
Not clear what the upside is for Cadence. Customers will answer that
over time based on the volume of their POs.
- [ A Wall Street Person ]
Good news for Cadence.
- [ A Wall Street Person ]
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